A new report from climate risk analytics firm First Street reveals that nearly 80% of datacenters worldwide are vulnerable to acute climate hazards, including flooding, extreme winds, and wildfires. These threats leave critical digital infrastructure prone to operational disruptions, increased downtime, and higher insurance and repair costs.
Location Determines Operational Costs
Jeremy Porter, chief economist at First Street, emphasized the importance of location in a press release: "Where you build a data center determines a large share of what it will cost to run for the next 20 or 30 years. Climate is a big part of that: cooling, water, and reliability all depend on location. But most valuations still focus on growth and treat climate as a secondary concern."
Beyond acute risks, chronic climate factors such as routine extreme heat and drought impact 54% of datacenter markets globally. These persistent conditions can also disrupt operations and escalate insurance premiums.
Outdated Risk Models
Matthew Eby, founder and CEO of First Street, noted that traditional underwriting relies on historical data that no longer reflects current climate realities. "As heat, drought, and water stress increase, outdated models simply don’t offer a complete view of risk anymore," he said in the release.
The study assessed 97 global datacenter markets and found regional disparities in vulnerability. The Americas lead in exposure to acute hazards like flood and wildfire, with 86% of capacity in elevated-risk markets. In comparison, 60% of datacenters in the Asia-Pacific region and 25% in Europe, the Middle East, and Africa face similar risks.
Regional Vulnerabilities
Porter highlighted that the Asia-Pacific market is most susceptible to heat and drought, with 89% exposure. Approximately 50% of US datacenters and 46% of those in Europe, the Middle East, and Africa are vulnerable to these chronic threats.
In the United States, regions including the Carolinas, Atlanta, the New York-New Jersey area, and northern Virginia—one of the fastest-growing datacenter markets globally—rank among the ten most exposed to both acute and chronic climate threats. Other rapidly expanding markets, such as Johor in Malaysia and Marseille in France, also feature among the most vulnerable. Conversely, lower-risk regions like Helsinki, Finland, are not experiencing such rapid datacenter buildout.
Scale Where Conditions Are Hardest
"In other words, scale is being built where operating conditions are hardest, not where they’re easiest," the report states.
This study adds to a growing body of research warning that datacenters not only contribute to global greenhouse gas emissions but are also susceptible to the climate disruptions those emissions exacerbate. The Guardian previously reported that about two-thirds of upcoming US datacenters, which require substantial water for operation, are planned for drought-prone areas. In March, Swiss Re found that new datacenters globally are increasingly located in regions facing climate risks such as hail and tornado activity.
Broader Impacts
Porter stressed that climate-fueled disruptions to datacenters have far-reaching consequences. "Datacenters run the digital services people and businesses rely on," he said. "So a climate hit to a local datacenter can radiate outward as a service disruption, on top of competing with that same community for power and water in regions already under stress."
